How to Win in the After-Sales Service Market

In many industries, the after-sales service market has become 4-5 times bigger than the original equipment business, and it's a high-margin cash cow. Still, most organizations squander the aftermarket's potential -- because after-sales support is hard to manage.

To extract profits from your aftermarket, support your services with the right business model. For example, when consumers can tolerate some level of product failure (a flat tire or faulty air conditioner), use a conventional model in which the customer owns the product and pays for support services as needed. But when product performance is critical, consider leasing products and guaranteeing performance through immediate onsite replacement and repair.

Today's Management Tip of the Day was adapted from the HBR article, "Winning in the Aftermarket," by Morris A. Cohen, Narendra Agrawal, and Vipul Agrawal.

By Editors  |  August 28, 2008; 8:00 AM ET  | Category:  Management Tip of the Day
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